Defaulting Limited Partner Clause Samples
The Defaulting Limited Partner clause defines the consequences and procedures that apply when a limited partner fails to meet its obligations under a partnership agreement, such as not making required capital contributions. Typically, this clause outlines steps the general partner may take, which can include imposing penalties, reducing the defaulting partner’s interest, or allowing other partners to purchase the defaulting partner’s share. Its core function is to protect the partnership from financial disruption and ensure that all partners fulfill their commitments, thereby maintaining the stability and integrity of the partnership.
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Defaulting Limited Partner. (a) Subject in all events to the provisions of Section 3.2, any Limited Partner that fails to make, when due, any portion of the Capital Contribution required to be contributed by such Limited Partner pursuant to this Agreement or to make any other payment required to be made by it hereunder when required to be made may, in the discretion of the General Partner, be charged an Additional Amount on the unpaid balance of any such Capital Contributions or other payments at 8.0% per annum from the date such balance was due and payable through the date full payment for such balance is actually made, and to the extent any of the foregoing amounts is not otherwise paid such amount may be deducted from any distribution to such Limited Partner. Any such Additional Amount owed to the Partnership shall be allocated and distributed to the other Partners funding such Capital Contribution or other payment pro rata to their fundings thereof (and, if there are no fundings in respect of any such Capital Contribution or other payment, pro rata to their Capital Commitments).
(b) If any Limited Partner fails to make, when due, any portion of the Capital Contribution required to be contributed by such Limited Partner pursuant to this Agreement or to make any other payment required to be made by it hereunder when required to be made, then the Partnership shall promptly provide written notice of such failure to such Limited Partner. If such Limited Partner fails to make such Capital Contribution or other payment within five (5) Business Days after receipt of such notice, then (i) such Limited Partner shall be deemed a “Defaulting Limited Partner” and (ii) the following Sections 8.3(c) through (h) shall apply.
(c) The General Partner shall have the right to determine, in its sole discretion, that whenever the vote, consent or decision of a Limited Partner or of the Partners is required or permitted pursuant to this Agreement, except as required by the Act, any Defaulting Limited Partner shall not be entitled to participate in such vote or consent, or to make such decision, and such vote, consent or decision shall be tabulated or made as if such Defaulting Limited Partner were not a Partner.
(d) The General Partner shall have the right in its sole discretion to either:
(i) determine that a Defaulting Limited Partner shall (A) not be entitled to make any further Capital Contributions to the Partnership; provided that the liability of such Defaulting Limited Partner to make Capital C...
Defaulting Limited Partner. The General Partners may elect, at any time the General Partners determine such competitive activity is not in the best interests of the Partnership, or in violation of the provisions of those certain written agreements entitled Distributor Agreement, dated March 7, 1997 and Entity Interest Agreement, dated March 7, 1997, such determination being in the sole discretion of a majority in interest of the General Partners, to treat a breach of Section 6.03 as a default. Such election by the General Partners shall be made by giving Notice to Defaulting Limited Partner of such default. The Defaulting Limited Partner's Interest shall be purchased in accordance with Section 10.15.
Defaulting Limited Partner. The Partners severally hereby agree and acknowledge their mutual obligation to make Capital Contributions to the Partnership in an aggregate amount equal to their total Capital Commitments. Accordingly, the Partners agree to the default and penalty provisions of this Section 3.6 for their mutual assurance and to promote the purposes of the Partnership. The Partners agree that the damages to the Partnership from any default by a Partner in respect of its Capital Commitment cannot be determined or estimated with reasonable accuracy, and, accordingly, agree that the penalty provisions of this Section 3.6 provide reasonable liquidated damages on default.
Defaulting Limited Partner